The Debt Crisis at American Colleges
August 24, 2011
Borrowing looms large in American life from homes to cars. But the explosion of student debt in the last decade is a pernicious trend that the colleges themselves are encouraging. As this semester begins, college loans are nearing the $1 trillion mark, more than what all households owe on their credit cards, say Andrew Hacker and Claudia Dreifus, authors of "Higher Education?"
Fully two-thirds of U.S. undergraduates have gone into debt, many from middle class families. Why has tuition climbed to $41,304 at Carleton College, $42,384 at Wesleyan University, and $43,190 at Vassar College -- three times over inflation since 1982? The short answer is that colleges have embraced a host of extraneous activities -- from obscure sports to overseas centers -- and tacked most or all of their tabs onto students' bills. Unlike businesses, which cut losing operations, colleges simply hike their tuitions.
One reason more students are borrowing is that few parents pay all or even most of college costs, a trend underway well before the recession.
- Last year, a typical family with college-age children spent $3,102 on dining out, but only $2,055 on education.
- Only half of entering freshmen say their parents had put anything aside; and of those who did, half had banked less than $20,000.
A school's financial aid adviser isn't always a freshman's best friend. While seldom openly stated, their job is to supply the college with as many paying freshmen as possible. Budgets even at schools like Brown and Duke will only balance if over half of their students foot the full bill, say Hacker and Dreifus.
Source: Andrew Hacker and Claudia Dreifus, "The Debt Crisis at American Colleges," The Atlantic, August 18, 2011.
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